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Need Money for Your Business? Best Ways to Get Funding Your Small Business

Published on April 1, 2021
by Contributor, Kit Elliott

Once you have a process for making money with your business, then you might consider getting a loan. I would only suggest getting a loan if your business is making a profit & you have a process for turning a $1 into $2. (or you have a proven track record for making money with your previous projects)

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Far too many times, I have seen people get loans just to purchase business cards, rent office space, buy office supplies and even hire staff without having a real business. Before you start, you should always fast-track your ideas to determine profitability.

Do not start a business for the money.
Start a business to provide value / make a difference.
Create a process to convert the value into money.
Fine-tune that process & scale up your business.

I recommend spending the bare minimum until you have a winner. Use the free resources that will allow you to get up and running at little to no cost. Now that you have the process down and your business is making money, here are 16+ options to get funding for your business. My goal is to make this a complete list leaving no idea hidden.

If you haven't seen our TikTok on “minimal viable product, then click here. We are creating an exhaustive list to help you get funding for your business. That list includes:

Friends and Family
SBA Loans for Startup Business
Line of Credit
Home Equity Loan
Crowdfunding
Rollover for Business Startup (ROBS)
Microloans from Nonprofit Lenders
Small Business Credit Cards
Equipment Financing
Purchase Order Financing
Angel Investors
Venture Capitalist
Grants
Fans & Followers

QUESTION: Do You Need Checks for Your Business?
These are the hard to find laser printer checks here.

Friends and Family

Family is probably the first place you should turn to when starting a business. I have 5 brothers and sisters, and each one of us has started a business throughout the years. We all chipped in to buy my sister's hair salon equipment and a few of us helped paint / stage the salon. I also remember when my other sister started a consignment shop, we all pitched in to help setup the store. My brother is in the goat business. I don't ask! LOL

Along with money, family and friends are probably willing to help with setup if you make it fun. There's nothing like a unappreciative family grouch who is not grateful for their family support.

There are four steps to going to friends and family when asking for money:

Have a solid business plan & a process for generating profits.
Ask for enough money to fund your business for the year.
Setup a payment plan for your friends and family.
Don't assume and treat this like free money.

My nephew's wife recently came to me asking to invest in her business. It's a solid plan, but it's just an idea. When asked about recent results and recent revenue, there were none. Make sure you work like hell to turn your ideas into cashflow, then, go to everyone on this list with the numbers.

SBA Loans for Startup Business

Government loan programs offer financial support to people starting or expanding a business. This helps those who may have trouble qualifying for a traditional bank loan.

In these programs, you’ll apply by creating a loan package with a participating lender. The federal government will guarantee a portion of the loan and will repay the lender if you default. This government guarantee reduces the risk to the lender and increases the likelihood of a loan being offered.

Government Resources for Your Small Business

Use these government resources and services to find a loan that best suits your business needs:

Small Business Administration (SBA) – Explore many types of loans for starting and expanding a business, handling disasters, and exporting goods.
U.S. Department of Agriculture (USDA) – Get information on government-guaranteed loans for rural businesses and local program contacts.
GovLoans – Research many types of federal loans for your business and learn how to apply.
Small Business Lending Fund (SBLF) – This Treasury Department initiative provides capital to qualified community banks and community development loan funds (CDLFs). This helps promote economic growth and create new jobs.

If your business has a relationship with an SBA Express lender, you can borrow up to $25,000 fast under the SBA Express Bridge Loan program.

Line of Credit

Lending Tree will connect you with a line of credit in just a few minutes. Click here and select your business structure.

There would be two reasons to get a line of credit. To establish a positive credit history and to gain access to short-term funding. Most businesses use lines of credit for operational expenses to increase inventory & operational expenses.

Once again, if you have a process in place to turning $1 into $2, then use a line of credit. Typically, the line of credit will give you checks to deposit into your business account, and the amount you deposit increases the balance of the line.

Home Equity Loan

Let's say you have built equity into your house, and you're thinking about a home equity loan to fund your business. I would not recommend getting a home equity loan for “high risk of failure” businesses like restaurants, bars and retail.

You would never buy inventory for risk of it losing value. If you have a process for turning a $1 into $2 and you need access to cash, then I recommend this loan (after you try a few others).

Crowdfunding

Crowdfunding raises funds for a business from a large number of people, called crowdfunders. Crowdfunders aren’t technically investors, because they don’t receive a share of ownership in the business and don’t expect a financial return on their money.

Here are the best crowdfunding sites for small businesses.

Kickstarter
Indiegogo
Fundable
GoFundMe
Patreon

Top Five Crowdfunding Sites for Small Businesses

Kickstarter is one of the most popular and best overall crowdfunding sites for small businesses because it supports all types of projects. The site has raised over $5 billion funding around 175,000 projects since 2009.

Indiegogo is a crowdfunding platform that allows you to tell your story, raise funds for your projects & people can become an early adopter for your project. Explore projects here.

GoFundMe is used mainly for personal hardships, but it works well for business projects too. I personally raised money for my mom's chemo years ago, and we were able to offset a ton of the hospital bills.

Patreon is not just for musicians anymore. Podcasters, teachers, trainers, coaches and writers can use Patreon to grow an audience and start your crowdfunding efforts. And it's free to use their platform (they take a percentage of each donation). Click here for details.

Fundable is an often overlooked platform, but this platform can raise millions for one project. You can easily create a profile & either raise money for equity or fulfillment. Click here for details.

Top Five Equity Crowdfunding Platforms

AngelList Venture
Start Engine
Circle Up
Wefunder
Seed Invest

Angel List – Started in 2010 and helped Uber raise seed money to start. AngelList brings venture capital online with private, professional fundraising tools for startups and investors. They currently have over $1 billion assets under management.

Start Engine – StartEngine is one of the largest equity crowdfunding platforms in the United States. They have raised over $250 million over 375 businesses. They currently have over 300,000 investors with almost half of all funds raised.

Circle Up – Circle Up is a consumer fund looking for visionary founders. They are currently looking for brands who are creating new categories and disrupting existing ones. If you're making $1 million to $15 million and looking to raise $1 million to $10 million.

Wefunder – Looking to invest in startups? Wefunder reminds me of Kickstarter but for investing. You're investing in companies in hopes of earning a return. You decide which companies you want to invest in.

Seed Invest – In 2016, equity crowdfunding became legal and now you can invest as little as $500 in a startup. This allows you to diversity your investments across different industries/startups. They allow you to raise funds for your startup OR invest in other startups.

Rollover for Business Startup (ROBS)

Rollovers as Business Startups is an option for an entrepreneur who has built up retirement savings but may not qualify for a business loan.

ROBS is a way to rollover your IRA into your business. If your business goes under, you will lose your retirement because you're committing your retirement to finance your business.

ROBS is only available for C corporations and is very expensive to hire a lawyer to file the paperwork. Therefore, it might not be a good fit for small businesses or sole proprietorships.

Lawyers charge around $5,000 for setup and a monthly fee.

Microloans from Nonprofit Lenders

The SBA works with designated intermediary lenders across the country to provide financing to small businesses. Find an intermediary near you.

If you need access to $50,000 or less than an SBA Microloan is an option (beware of high interest rates). If you've tried and failed to get credit from these other sources, then a microloan is another avenue.

Small Business Credit Cards

Most credit cards have a 6 month to 12 months zero interest introductory rate. This is a great way to borrow money without a cost to you. On top of this 0% interest rate, these small business credit cards offer cashback & travel rewards that are very lucrative when you use it for your advertising.

For example, if you're just starting out – you could easily apply for a Chase Southwest Airlines Rewards business credit card. Do you think you're going to spend $1,000 within 90 days? Yes. So you get an additional 40,000 reward points, which can be used to get $400 cashback into your business.

On top of the cashback, you can also elect to use those points to travel. Here's how to travel to most places for $11.20.

Once your introductory rate expires, please be on the lookout for interest rate fees. I recommend only charging what you can payoff for the month.

Equipment Financing

Looking to replace old equipment or add to your existing equipment inventory? Equipment financing or leasing is another option for startups.

Most lenders require a full-year of business with revenue coming in and the ability to process credit cards.

Benefits:

Quick Approval Process
Deduct Your Payments as Business Expense
Keep Cash on Hand

The fastest way to get approved is to have cashflow statements & be able to show your money coming in. Also, you'll want to have your business plan ready for your lender & lenders will advance you up to 100% of the cost price for each piece of equipment.

Purchase Order Financing

Let's say you find a winner, but you need money to scale up. You need money for inventory. You need money to fulfill orders. You need money to scale your ads. Consider a purchase order financing which is a short-term finance option that provides you with the capital to pay suppliers upfront for verified purchase orders.

This allows you to accept large orders and adjust the loan up/down to meet your needs. Use this when you're selling finished goods that aren't modified by you in anyway. Rates can range between 1% to 6%, but check the terms. Some companies collect every 10 days so this route can get expensive.

Pros of PO Financing

PO Financing is not a personal guarantee loan. The lender takes the risks, but check with the terms to make sure the lender absorbs the losses if your shipment gets lost or a customer does not pay.
These are short-term, high-cost financing to be paid off immediately.
Customers pay YOUR lender directly (not you). You can't hide the terms and they will know you're using lending for this transaction.

Qualifications for PO Financing

Finished, Unaltered Goods
B2B Customers or B2G Customers
At Least $20,000+ Orders
Profit Margins at Least $15%
Creditworthy Customers
Reputable On-Time Suppliers

Grants

The SBA helps Businesses Find Funding

The Small Business Administration works with different organizations to provide federal financial assistance (grants) community resources for certain small businesses. If you can't find any grants that fit your profile, you can see if you qualify for any of our funding programs, or schedule to meet with a counselor to talk about financing your business.

Grants for Research and Development

If your small business is engaged in scientific research and development, you may qualify for federal grants under the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs. These programs encourage small firms to undertake scientific research that helps meet federal research and development objectives and have high potential for commercialization if successful.

Did you know that freelancers on Fiverr will write the grants for you? You can search by reviews and see which one matches your goal. Click here to view grant writing services on Fiverr.

Angel Investors

You may be able to hook up with an angel investor through one of the websites that provides entrepreneur and angel investor matching. If nothing else, you can at least get your business proposal before a wider audience. Here's just a sampling to get you started:

Angel Capital Association (ACA) – The North American professional association of active accredited investors provides unparalleled access to trending ideas and professional knowledge to help improve returns and promote effective public policies for angels and startups. Although not a funding source, ACA provides entrepreneurs an inside view into how angels think.

14,000+ angels
250+ angel groups, accredited platforms & family offices
Ideas. Returns. Connections.

Click Here to Find Angels

Additional VC Companies

Gust (formerly Angelsoft) – Receive recommendations on the best places to find capital based on your specific needs and situation. Easily find accelerators and investor groups, then apply with your Gust Company Profile. Thousands of companies have used their profiles to collectively raise over $1 billion through the Gust angel network. Get Started

You can raise capital through Gust in four easy steps. First, you tell Gust about your startup. Second, understand how you compare with other startups. Third, get funding recommendations. Fourth, apply for investment.

The BC Angel Forum – Founded in 1997, Angel Forum is one of the longest serving angel networks in Canada and since September 2018 under new management.

Technology and non-technology pre-screened companies seeking equity financing of $100,000 to $1 million, deliver “live” presentations to pre-screened private and corporate investors.

The Angel Capital Association – The professional association of active accredited investors. Over 14,000 angels, you can join this association for as little as $250 to get access to their data, their angel groups and their resources that can fuel your business.

Venture Capitalist

Venture Capitalists AKS VC's are an outside group that takes part ownership of the company in exchange for capital. The percentages of ownership to capital are negotiable and usually based on a company's valuation (think Sharktank).

Investors can give you funding, and there are several ways to get venture capital right now.

First – you want to look for individual investors or have investors find you.
Share your business plan & results with investors. How much are you making & what are your plans to scale? I find that VC won't invest in ideas. They want a proven track record or a proof of concept.
Investors will look at your management team, your products and services and your financial statements before investing in your company.
Work out the terms. You'll want to make sure that you are getting a fair amount for either a share of the company or a loan to repay.
Once you agree on a term sheet, VC money usually comes in rounds as each round plays an active role in growing the company. As your company meets a milestone, you get another round of VC money.

Fans & Followers

Now, I've seen this done successfully many times so I'm including fans and followers on this list. If you have an existing fanbase, go out to them and let them know what your plan is, what your dream is and tell them you're raising $ amount of money. If they want to help make this a reality and follow you on this journey, please click the link in your profile to donate.

Ask for whatever they can spare because people will give $5 to $500 to $5000.

Recommended Ways to Get Money to Start a Business

Never start a business just for the money, start a business to make a difference. Click To Tweet

I want you to write this down. Never start a business just for the money, start a business to provide value & make a difference. If you are in this just for the money, you'll experience burnout and displeasure at the process. None of it will be fun. When you provide value & start making a difference, you'll get way more satisfaction in your business.

Find a Side Hustle
Start Freelancing on the Side to Create Funds
Start Flipping Items
Use Credit Cards if You're Making Money
Borrow Against Your Home if You're Making $$
Cash in Retirement Accounts if You're Making $$
Get an SBA Loan